UBS Economics-Global Economics Strategy _Core Convictions (Multi-Asset R...-117023323

ab4 August 2025Global ResearchGlobal Economics & StrategyCore Convictions (Multi-Asset Rundown)All our views on markets in a single pageThis 'core conviction' document is our weekly one-page multi-asset rundown where we highlight key events in the week ahead and any view changes (see page 2). Highlights this weekWe estimate that last week’s tariff increases have lifted the weighted average US tariff further from 16% to 19%, with section 232 investigation outcomes still pending. Friday’s payrolls report may be a wake-up call for markets: the near stall in employment growth is consistent with an economy that is struggling to grow (domestic demand at 1.2% in Q2), but this is before we’ve even seen the full price impact (and real income erosion) from the tariffs. If our forecast for slightly negative domestic demand growth in H2 is correct, payrolls could stall, and the Fed could cut more aggressively than what the market is pricing even after Friday (we forecast 100bp).We are bracing ourselves for August being a down month for equity, but would be inclined to buy into it. We are even more cautious on EM manufacturer stocks given the lack of tariff premium priced. We prefer companies with higher domestic exposure (OW China, Brazil, Indonesia, Malaysia, Philippines). We like JPY vs KRW as a portfolio hedge given the very strong inverse correlation with the cyclical/defensives equity ratio. In fixed income, we think SOFR June ’26 can fall further to 3.1%, with Kugler’s resignation and near term Fed commentary possibly acting as further catalysts. Finally, breakevens/inflation swaps look cheap in both the US and Eurozone. This report has been prepared by UBS AG London Branch. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 4. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.EconomicsGlobalArend KapteynEconomistarend.kapteyn@ubs.com+44-20-7567 0531Bhanu BawejaStrategistbhanu.baweja@ubs.com+44-20-7568 6833Shahab JalinoosStrategistshahab.jalinoos@ubs.com+1-212-882-5532Matthew Mish, CFAStrategistmatthew.mish@ubs.com+1-203-719 1242Manik NarainStrategistmanik.narain@ubs.com+44-20-7568 3635Andrew GarthwaiteStrategistandrew.garthwaite@ubs.com+44-20-7567 4343Gerry FowlerStrategistgerry.fowler@ubs.com+44-20-7567 5490Reinout De BockStrategistreinout.de-bock@ubs.com+44-20-7567 0152Vassili SerebriakovStrategistvassili.serebriakov@ubs.com+1-212-713 1850Rohit AroraStrategistrohit-b.arora@ubs.com+65-6495 5232Julien ConzanoStrategistjulien.conzano@ubs.com+44-20-7567 2067Sean SimondsStrategistsean.simonds@ubs.com+1-212-713 2851Global Economics & Strategy 4 August 2025ab 2Cross-Asset ViewsEconomic BackdropUBS key macro